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High unemployment in the U.S. stubbornly lingers -- bad news for the politicians running for reelection as midterm elections are fast approaching. And panicky policymakers seem to be leaning even harder on the usual job-creation tools, like forcing down interest rates, despite this strategy's sketchy track record in boosting employment so far.

In a move that set the pace for the week's trading, Fed chief Ben Bernanke's declared that the Federal Reserve stood ready to provide further assistance if the economy slows much more. Credit markets saw that statement as opening the door for further quantitative easing, and Treasurys rallied as a result.

But while the policymakers in the spotlight cling to orthodox levers in an effort to boost employment, another stream of thought seems to be picking up momentum behind the scenes. Rather than use the blunt instrument of further interest rate cuts to boost overall demand, a growing chorus is now pointing to the mismatch between worker skills and a remarkably strong roster of job openings across the country.

Worth Paying Attention To

Minneapolis Fed President Narayana Kocherlakota was among the first to note the discrepancy. Based on job listings, unemployment would tumble to 6.5% -- if workers had the right skills, Kocherlakota has calculated.

Bernanke's every utterance gets analyzed for what it might mean about the direction of interest rates and has a major impact on markets, of course. But in the shadows, Kocherlakota's work seems to be resonating with a highly influential cast and could eventually be much more consequential for investors than the billing it currently gets.

Kocherlakota detailed his findings in the middle of August. And high-profile New York Times columnist David Brooks picked up on the thread in an article earlier this month. Along with a stalled housing market that depresses labor mobility, one of the big problems facing the country is that "we have too many mortgage brokers and not enough mechanics," Brooks noted.

Indeed, some companies in the manufacturing sector have complained that a shortage of skilled workers is a key reason they're unable to boost sales.
"Stunning Finding"

Now, no less a heavyweight when it comes to economic policy than former President Bill Clinton seems to be throwing his weight behind the position. Known for presiding over one of the biggest sustained economic expansions in U.S. history -- one that was robust enough to turn government deficits to surpluses -- Clinton endorsed the idea in an interview this week that an emphasis on retraining could help jump-start employment.

"Buried in that unemployment rate was the stunning finding that for the first time since World War II," Clinton said about a recent unemployment report, "we are coming out of a recession where posted job openings -- that is, they'll hire us tomorrow, you and me -- posted job openings are going up twice as fast as job hires."

He added: "I think the quickest thing you could do is to accelerate the transfer of discretionary training money to states or to the local labor department that would go direct to employers, so that people, while they're drawing unemployment, can get trained and move and fill those jobs."

With interest rates already at rock-bottom levels, it's hard to see how further Fed monetary easing can have a dramatic impact. And while boosting demand may be marginally helpful for creating jobs, focusing more resources on helping workers retrain for positions already listed seems like a far better route.

Reequiping the Workforce

A shift toward a more effective policy would have major consequences for the financial markets as well. Gains in employment would help bolster real domestic demand and could propel stocks. Yields on U.S. government bonds, which slid this week on anticipation of further policy manipulation, could also bounce back.

Looking for practical ways to reequip the workforce should play a much bigger role than the current fixation on interest rates allows. And as bigger names start pounding the table on the issue, it may finally start to happen.

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KATHY'S FREE

Unemployment does help those in need once out of a job, and the majority of those receiving these benefits may be nearing retirement age, try to obtain jobs other than what they're educated and trained for, to no avail, as age, experience and possible black balling that the former employer needs to make themselves look good or justify why they're not renewing contract or firing employees. Why doesn't the government fine, evaluate and revamp companies that have employees' receiving buy outs, being fired, all in large numbers each year, could be a personality conflict(employer/employee), or the employer wants to bring in their own friends, and shouldn't reflect the competence of a person out of a job!! Year's ago, it was the older person that employers would prefer, now it's the money factor and the companies,schools, etc, are hiring just out of school students for the lower pay, whereas, the person with time and experience will either have a pay cut,risk of being let go, or no job!

I HAVE to ask ... So many of the currently unemployed have skills and/or trades that are readily marketable. Why don't these people establish an online site (funded by contributions from among them,) where they might find complimenting work/job partners and/or management and employee people willing to join forces to start up their own micro-version or small / Mom & Pop versions of what they can produce? Funds to be raised by others at the site "investing" and family/friend loans-investments to get started? So many people out there can/should be able to be in/start up a Mom & Pop/Small Business. And keep their jobs in America!!! Additionally, buy their supplies ONLY from AMERICAN SUPPLIERS TO KEEP OTHER JOBS IN AMERICA. And finally, A number one start-up goal, to become a CASH ONLY operation. Meaning to open and develop with suffient cash to operate without relying on large banks/bank loans and credit which have shown to reek havoc in this nations' economic "crash."

FEB. 2008, PRES. OBAMA WAS GIVEN INFORMATION THAT WOULD HAVE PUT MILLIONS BACK TO WORK BY YEARS END WITHOUT COSTING THE GOVERNMENT BILLIONS OF DOLLARS. HE IGNORED THE INFO AND PUSHED HIS STIMULUS AGENDA. HE STILL HAS ACCESS AND DOES NOTHING. SENATOR'S WARNER AND WEBB OF VA. WERE ALSO GIVEN THE INFO.

Obama Socialism = Laziness, indifference, dishonesty, personal irresposibility. That's not the America I know. If it weren't for the Greatest Generation (I am not saying they were perfect) we would be speaking German. Who will have the balls or overies to stand up to the Obama socialist utopian fantacy? History is the best teacher - SOCIALISM HAS NEVER WORKED AND NEVER WILL. America first! American made! Be honest - Be responsible - Be Unselish - I want to puke each time I see Obama and his cohorts lie with a straight face and smile...its a sad time for America.

LOL! How about something simple like voting out the DEMS who destroyed the economy and created the worst unemployment in decades? And then how about continuing the BUSH TAX CUTS FOR THE "RICH" SO THEY CAN HIRE??? And finally vote out Obama ASAP, dump Obamacare, no more bailouts, and retake America! And Jon Stewart can pick grapes! Yeeeeehaw! LOL!

Most folks that are unemployed already have college degrees and will not qualify. Doesn't the government get anything right? I was laid off last year once again and every person at unemployment had a degree. The problem is that we are experienced and companies do not want experienced workers because they can't pay low salaries.

I have never read such a crock of XXX. Makes something that is already on the books look like a savior and ignors the root causes of this ressession. Over Spending by the Government and wasting money on Medical Care when simply fixes could have saved money. These reportors really miss the point. Keep the jobs in America and new job creation by incentatives. Notice now how some of the Democrates want to keep the Bush Tax Credits? Election time. Get these Social Democrates and OBAMA out first.